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As Lenders Begin to Stir

comments (0) December 31st, 2010 in Blogs

Richard Defendorf, contributor

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It might take a while longer before increases in commercial lending find their way to credit-starved homebuilders, but at least there are signs that the financing clouds will lift a little further in 2011.

A Wall Street Journal story published on Wednesday, for example, cited Moody’s Analytics estimates putting growth in commercial and industrial lending at 0.2% for fourth quarter 2010 and 3% for 2011. J.P. Morgan Chase reported a 7% increase in loans outstanding to “middle market” companies ($10 million to $500 million in revenue), the Journal notes, while the bank’s lending to small business in 2010 was up more than 40%.

Activity in select areas

Increases – mostly modest ones – in commercial loans outstanding are cited elsewhere in the story, with a Wells Fargo vice president pointing to "some pretty big pops in specific areas, such as asset-based lending and real-estate lending,” and expectations for ongoing increases in 2011.

One of the borrowers: Aetna Plywood Inc., a wholesale distributor of wood and composite products. Based in Maywood, Ill., the company has $75 million-plus in annual sales, the company’s owner told the Journal, and recently increased its line of credit with Wells Fargo by about $8 million in anticipation of a jump in receivables and inventory and an acquisition now in progress.

As Moody’s Analytics’ chief economist, Mark Zandi, pointed out, commercial and industrial lending "is the last thing that turns in a business cycle." If lending does in fact track steadily upward over the next 12 months – and consumer confidence, as we mentioned last week, can help brighten the mood and outlook for the overall economic picture – homebuilders might get a little more lender relief.

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